Sunnier outlook for Scottish holidaymakers’ summer spending

UK purchasing power in August 2018 could be 6 per cent higher than last year, with holidaymakers able to buy 9 per cent more in the US and 5 per cent more in the euro area, the analysis says.

However, in comparison to August 2015, before the Brexit vote, UK holidaymakers will find themselves 13 per cent short of their former purchasing power and 18 per cent down as compared to purchasing power before the financial crisis in 2007.

Mark Hoskyns-Abrahall, Edinburgh office senior Partner at PwC, said: “The pick-up in the exchange rate is welcome news for holidaymakers flying overseas from Scotland’s airports. Since the Brexit vote we’ve seen sterling devalued and slower economic growth, which has limited how far a pound goes when exchanged for the likes of a euro or dollar.

“But with a slight recovery in the pound combined with improved earnings growth we have a sunnier forecast this summer. And while ‘staycations’ in Scotland will remain a huge draw for many, particularly if the recent good weather holds, the improved bang for your buck, along with the breadth of new routes launched from Scotland’s airports in the last year, could see more families head to the Europe and destinations in the US.”

Ryanair last year increased its routes from Edinburgh Airport to include Budapest, Carcassonne, Corfu, Eindhoven, Baden-Baden (Karlsruhe), Hamburg, Katowice, Nantes, Prague, Berlin Schoenefeld, Szczecin, Toulouse, Tenerife, Valencia & Wroclaw.

Edinburgh is also set to introduce flights direct to Beijing next month, with Hainan Airlines, and to Dubai from October with Emirates.

At Glasgow Airport, more than 30 routes were added in 2017, including Delta Airline’s New York JFK service, Loganair’s Bergen service and Lufthansa’s Munich service.

John Hawksworth, chief economist at PwC, added: “A combination of sterling’s recovery over the past year, despite falling back a little recently, and a pick up in earnings growth has improved the outlook for UK holidaymakers’ spending power this summer.

“But while overseas purchasing power is now back on a positive trajectory, there’s still a long way to go before Brits really begin to feel the benefits abroad.

“The Brexit vote and the financial crisis both significantly reduced how much the pound could purchase overseas and squeezed real wage growth. This longer term decline won’t be reversed overnight, but there is a somewhat sunnier outlook for UK holidaymakers abroad this year than there was last summer.”

Within the euro area, UK purchasing power has weakened most in Spain and Greece where local inflation was higher. The Brexit vote led to a renewed sharp fall in UK purchasing power in these popular holiday destinations and PwC projects only a modest recovery of around 2 per cent in 2018 from the low of 2017.

Looking further ahead to December 2018, UK wages could buy 2 per cent more than the same time last year on average in popular winter holiday destinations like Australia, India and Thailand. However, this is 10 per cent less than in December 2015 before the Brexit vote and 33 per cent less than in 2007 before the global financial crisis.